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Larkspur Company leases an automobile with a fair value of $15,761 from Paul Motors, Inc., on the following terms. Non - cancelable term of 50 months. Rental of $330 per month (at the beginning of each month). (The present value at 0.5% per month is $14, 640.) Larkspur guarantees a residual value of $1,020 (the present value at 0.5% per month is $ 795). Larkspur expects the probable residual value to be $1,020 at the end of the lease term. Estimated economic life of the automobile is 60 months. Larkspur's incremental borrowing rate is 6% a year (0.50% a month). Paul's implicit rate is unknown. Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e. g. 5, 275.) Present value of the lease payments S

Larkspur Company leases an automobile with a fair value of $15,761 from Paul Motors, Inc., on the following terms. Non - cancelable term of 50 months. Rental of $330 per month (at the beginning of each month). (The present value at 0.5% per month is $14, 640.) Larkspur guarantees a residual value of $1,020 (the present value at 0.5% per month is $ 795). Larkspur expects the probable residual value to be $1,020 at the end of the lease term. Estimated economic life of the automobile is 60 months. Larkspur's incremental borrowing rate is 6% a year (0.50% a month). Paul's implicit rate is unknown. Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e. g. 5, 275.) Present value of the lease payments S

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Larkspur Company leases an automobile with a fair value of $15, 761 from Paul Motors, Inc., on the following terms. Non - cancelable term of 50 months. Rental of $330 per month (at the beginning of each month). (The present value at 0.5% per month is $14, 640.) Larkspur guarantees a residual value of $1,020 (the present value at 0.5% per month is $ 795). Larkspur expects the probable residual value to be $1,020 at the end of the lease term. Estimated economic life of the automobile is 60 months. Larkspur's incremental borrowing rate is 6% a year (0.50% a month). Paul's implicit rate is unknown. Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e. g. 5,275.) Present value of the lease payments S
Transcribed Image Text:Larkspur Company leases an automobile with a fair value of $15, 761 from Paul Motors, Inc., on the following terms. Non - cancelable term of 50 months. Rental of $330 per month (at the beginning of each month). (The present value at 0.5% per month is $14, 640.) Larkspur guarantees a residual value of $1,020 (the present value at 0.5% per month is $ 795). Larkspur expects the probable residual value to be $1,020 at the end of the lease term. Estimated economic life of the automobile is 60 months. Larkspur's incremental borrowing rate is 6% a year (0.50% a month). Paul's implicit rate is unknown. Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e. g. 5,275.) Present value of the lease payments S
Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments $
Transcribed Image Text:Your answer is incorrect. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments $
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